Residential solar lender Sunlight Financial to go public following SPAC deal

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Image: Balon Greyjoy/Wikimedia Commons

US residential solar financing group Sunlight Financial is to list on the New York stock exchange after forging a partnership with special purpose acquisition company (SPAC) Spartan.

Spartan, backed by funds managed by an affiliate of Apollo Global Management, has combined with Sunlight Financial in a deal that values the combined entity at roughly US$1.3 billion.

Geoffrey Strong, the chief executive of Spartan and senior partner and co-head of infrastructure and natural resources at Apollo, told investors today (26 January) that Sunlight appealed as it sits in “the most attractive and fastest growing segment” of the solar sector, “really getting into the sweet spot of the market.” The deal is expected to close in the second quarter of 2021.

Sunlight Financial offers its partners a range of solar loan products for residential properties. The company’s online platform is accessible to partners directly, or through a quick technical integration.

Early Facebook executive Chamath Palihapitiya, hedge fund sponsor Coatue, funds and accounts managed by BlackRock, and investment managers Franklin Templeton and Neuberger Berman will lead a US$250 million investment in the company through Private Investment in Public Equity (PIPE) at a price of US$10 per share.

Palihapitiya tweeted on 25 January that he was “excited to partner” with Phillippe Laffont, founder of Coatue to lead the PIPE in Sunlight, which he called “a leader in the residential solar boom”.

The PIPE purchase will give the institutional investors a 19% share in the newly listed entity. Spartan stakeholders will have roughly 26%, while existing investors, which include Tiger Infrastructure Partners, FTV Capital, and founder Hudson Sustainable Group, will retain approximately 50% of the combined company.

Matt Potere, chief executive officer of Sunlight, said the listing will help the company to accelerate its earnings and revenue growth. In a statement announcing the combination, Sunlight said it has financed upwards of US$3.5 billion of loans, has and arranged financing for 10,000 residential solar systems with a combined capacity of 500MW to date. Sunlight’s current management team will stay on to lead the business when it goes public.

“While the solar market is still nascent,” Potere told investors, “consumers convert to solar for sound economic reasons…the cost of utility power increases 2-3% per year which is making solar cheaper on a relative basis”

Potere added that there has been “substantial growth” in the US residential solar market in the past decade, “and Sunlight plays in the fastest growth segment”, noting that two thirds of residential solar installations in the US are financed through a loan.

 “We are proud to have built a profitable, capital-light company that generates significant free cash flow and is poised for strong, sustainable growth,” Potere said in a statement.

Spartan CEO Strong added that the Sunlight business has “substantial operating leverage, which well prepares Sunlight to grow and profit for years to come.”

Leading figures in the US residential solar market have said their balance sheets are already starting to recover from the affects of COVID-19 restrictions in the country. Portere told panellists at a virtual webinar last October that the loan provider’s third quarter sales growth was 50% higher in 2020 compared to the same period last year, rebounding from a Q2 hit by sales-in-place orders.

Read Next

PV Tech Premium
March 4, 2021
An exclusive recording from our Solar Finance & Investment Europe event, featuring a panel discussion on the future of the solar industry.
PV Tech Premium
March 2, 2021
With three years of financial and business data available, we can start to analyse a number of possible trends, one of these is the changing landscape surrounding Sunnova's supplier base for PV modules, inverters and energy storage.
March 1, 2021
Xcel Energy has announced plans to double its renewables and battery storage capacity in Colorado by 2030, as the utility progresses with efforts to reach 100% carbon-free electricity generation across its service area by 2050.
February 26, 2021
EDP will focus on North America to ramp up its solar capacity in the next five years as part of a new strategic update that will see the Portuguese utility target more than 50GW of renewables additions by 2030.
February 24, 2021
A round-up of solar industry news from across the US, including updates from National Grid Renewables, Capital Dynamics, CenterPoint and the state of California.
February 22, 2021
COVID-19-induced project delays impacted India’s solar power transition last year, but 2021 is still set to be a “landmark year” for the resource, according to new research.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
March 9, 2021
Solar Media Events
March 17, 2021
Solar Media Events
April 13, 2021
Solar Media Events
April 20, 2021